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Comments from the President (current page)

Key Personnel / Management Team

Comments from the President

The large general contractor is hyper-focused on gaining “efficiency” in the “process” of commercial construction. The complexity in the process of building a building, or renovating a building is staggering. This contractor has engaged tremendous resources in an effort to gain the efficiency needed to establish some standardization in what is uniquely their “one-off” business model. 

A primary obstacle to this need for efficiency is the evolution of a level of obsolescence for the geographic-based construction products distributor. American Direct believes this evolution is the result of four factors/trends reshaping distribution to drive the required channel efficiency

  1. “No Such Thing as a Hard Bid”- For the most part every contract construction project is a series of requests for pricing. Even in localized markets the “hard bid” environment has changed to the point where the first bid to a general contractor is really a “pre-qualification” of the ultimate successful offeror. Price while still extremely important is less significant than expertise (can the bidder actually complete the work) and knowledge (does this bidder have proprietary information to solve unforeseen problems when they arise). The general contractor is looking for a collaboration relationship that adds value.
  1. Shift to Design-Build / Design-Construct – There has been a seismic transformation in the construction industry and this has already changed the general contractor’s buying habits. Contractors are investing tremendous resources in “pre-construction” services. And increasingly they are asking distribution to do the same. 
  1. Specifications Are Guidelines – The architectural specification has become less of a determination of products to include in an individual construction project and more of a starting point, a reference, a standard for product selection. Therefore, the VALUE of providing product specification is reduced and yet the NEED for appropriate field applications has increased.
  1. Budgets Drive Decisions – The typical construction project has become a series of trade-offs and negotiations not between the architect and the owner but between the owner and the general contractor. Therefore, the general contractor has become the key decision maker in driving product selection. Contractors and owners are motivated by dollars and completion schedules not specific products.

The prevailing trend in commercial construction is toward supply chain management and distribution channel integration this is what American Direct describes as: 

What was considered value-add yesterday, even today might not be viewed as value-add tomorrow